Can I afford to retire?

When most people hear the word retirement, it does not prompt concern, in fact, the idea of retirement is nothing short of the feeling of excitement. Perhaps the reason for this is that many in truth do not understand what it truly means to retire. Although the term can be left to subjective interpretation, one thing that we all need to understand objectively is the element of affordability to retire.

“Can I afford to retire?” The question crosses very few minds and spells concern to even fewer, but the reality is we need to be worried. Today, there is no telling how much ‘survival’ will cost in the years to come, and that is why planning and preparation remains vital. But what does it really mean to be able to retire? Experts say one is only truly able to retire if they can maintain the same standard of living they had during their working days once they have retired.

This may seem like a no brainer, especially given that most jobs now provide a pension fund after retirement. What most people do not know, however, is that only about 8 percent of Namibians are considered able to retire. This is an alarming statistic because this leaves the majority of the population unable to afford the cost of living after retirement. Because most people are unable to retire independently without depending on government funding or some kind of financial assistance, they are forced to continue working past retirement age.

I have a lot of philosophies that I live by and many of them are centred around the importance of planning ahead of time. There is nothing worse than being faced with an obstacle you cannot overcome. One of the philosophies I live by is “proper planning will leave you with peace of mind”. One of the detriments that we create ourselves is negligence. We neglect to do the things that matter the most to us and that could shape our tomorrow.

Have you ever taken time to examine what your financial stance might look like after retirement? Of course, you may be part of the 8 percent, or – worst case scenario – you are part of the majority that cannot afford to retire. The point here is that we need to be aware of how our planning today affects our tomorrow.

To reiterate what has been stated before, yes, planning is important, however, financial planning alone will not save you. You need to do what is called life planning. This type of planning involves the realisation of your needs and wants as well as how much or what you need, to get these desires you have. These may range from hobbies to mega expenses such as owning farming land. Once this is done, you can sit down with your financial adviser and talk about financial planning. Here, you will need to look at what you have versus what you want versus what you can afford versus what you will afford after retirement. This will give you an idea of how much more you need.

There are cases in which you may get promotions at work or start a business that will do well in the next 10 years, which you may not anticipate now, but it should be stressed that financial and life planning is not a one-off analysis, it is life-long. It is recommended that you do a review every second year. Strict monitoring of one’s finances is important because this allows you to also anticipate the cost of living from a short period of time such as 2 years, to longer periods such as 20 years from today.

Having a financial adviser/advisers includes a lot of elements, but most important is the trust and transparency between the two parties. Once this is established, it makes planning smoother because the two parties can discuss issues such as the need to increase savings and the like.

Security is also very crucial; protect what is important to you. Insurance is one way to go about it. Policies such as life cover and retirement annuity serve as a security measure for you and your loved ones should you come face-to-face with financial strains. There is nothing more satisfying that knowing that you are covered should you be faced with the unexpected. Even if you are part of the 8 percent that can afford to retire, savings, life cover and retirement annuities can still be an option for you. Extra income can go a long way for you and your family. Planning your future spending will help protect you against unnecessary debt. Do not turn a blind eye to what you do not foresee – be prepared.